NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Technological Learning and Labor Market Dynamics

Martin Gervais, Nir Jaimovich, Henry E. Siu, Yaniv Yedid-Levi

NBER Working Paper No. 19767
Issued in December 2013
NBER Program(s):   EFG

The search-and-matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological learning-by-doing: the notion that it takes workers time using a technology before reaching their full productive potential with it. We consider a novel source of business cycles, namely, fluctuations in the speed of technological learning and show that a search-and-matching model featuring such shocks can account for both facts. Moreover, our model provides a new interpretation of recently discussed "news shocks."

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Document Object Identifier (DOI): 10.3386/w19767

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